1

INTRODUCTION TO INDONESIA FINANCIAL

SERVICES AUTHORITY

(OJK) Japan, October 2018

Outline

2

Non-Bank Financial Institutions (NBFI)

NBFI - Insurance

Indonesia Financial Services Authority (OJK)

Indonesia Financial Services Authority (OJK)

3

Background of OJK (1/2)

BANK OTHER FINANCIAL INSTITUTION

Controlled and monitored

by Indonesia Central Bank

(BI)

Regulated and supervised by

BAPEPAM–LK, MoF

Restructuring supervisory and

regulatory body involved in financial

sectors

Regulatory and supervisory

conducted for all financial

service sectors must be

integrated

Before 2011

Globalization, fast growing IT, innovations and lots of problems

raising in financial sector.

Indonesia Financial Services Authority (OJK)

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Background of OJK (2/2)

Act No. 21 of 2011 gives a legal

basis for the establishment of OJK

body.

OJK is independent institution and

not part of Government agency.

Independence of OJK is

implemented in its structure.

OJK is head up by commissioners

consist of 9 persons in collective

and collegial manners.

Each chairman has its definite time

period of leadership.

After 2011

OJK in its acitivities holds the principles :

1. Independency: OJK must independent in its activity without any

interference from the Government and other parties.

2. Rule of law: all its activities are based on the regulations.

3. Publict interest: mainly for customer and public interest.

4. Transparent: open to any ideas to obtain information which is true,

honest and non discriminative, with appropriate treatment to human

rights and classified Government data.

5. Profesionalism: its daily activities encompass works with high

professionalism and code of ethics.

6. Integrity: high integrity in each regulation and decisions made, anti

corruption.

7. Accountable: focusing on public interest, all the decisions made are

answerable to the public.

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Indonesia Financial Services Authority (OJK) Objectives and Function of OJK

Encourage the financial services sector to be held on a regular basis, fair, transparent, and accountable.

Realizing the financial system to grow in a sustainable and stable.

Protecting the interest of consumers and society.

Regulation and supervision of the activities of financial services in the banking sector, capital market, insurance, pension funds, financial institutions, and other financial services institutions.

To organize an integrated system of regulation and supervision of all activities within the financial services sector.

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Article 6 Act 21/2011

OJK regulates and supervises the financial service sector:

Capital Market Banking Non Bank Financial

Institutions (NBFI)

Indonesia Financial Services Authority (OJK) Duties of OJK (1/2)

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Financial

Service

Institutions

Insurance

Banking

NBFI

Capital

Market

Pension Fund

Other Financial

Institutions

Financing Institutions

Employer Pension Funds

Pension Fund Financial Institutions

Life insurance

General Insurance

Reinsurance

Insurance Brokerage, Reinsurance

Brokerage, and Insurance Loss Adjuster

Financing Company

Venture Capital Company

Infrastructure Financing Company

Guarantee Company

Secondary Mortgage Facility

Indonesian Export Financing Company

National Social and Security Institutions

Microfinance Institutions

Pawnshop

Indonesia Financial Services Authority (OJK) Duties of OJK (2/2)

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Indonesia Financial Services Authority (OJK) Organization Structure (1/3)

Board of Commissioner

Chairman

Vice

Chairman

Chief Executive

Functioning as

Banking Supervisor

Head of Board

of Auditors

Commissioner in charge

of consumer’s education

and protection

Ex-Officio member

from BI

Deputy Commissioner of

NBFI Supervision II

Chief Executive

Functioning as Capital

Market Supervisor

Chief Executive

Functioning as NBFI

Supervisor

Ex-Officio

member from

MoF

Deputy Commissioner of

NBFI Supervision I

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Indonesia Financial Services Authority (OJK) Organization Structure (2/3)

Deputy Commissioner NBFI

Supervisor I

NBFI Supervision

Department 1B NBFI Supervision

Department 1A

NBFI Institutional and

Product Directorate NBFI Regulation,

Research, and

Development Directorate

NBFI Statistics and

Information Directorate

NBFI Supporting

Services Directorate

Microfinance Institutions

Supervision Directorate

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Indonesia Financial Services Authority (OJK) Organization Structure (3/3)

Deputy Commissioner NBFI

Supervisor II

NBFI Supervision

Department 2B NBFI Supervision

Department 2A

Insurance and Health

Social Security Agency

Supervision Directorate

Financial Technology

Regulation, Licensing, and

Supervision Directorate

Financing Institutions

Supervision Directorate

Specific Financial

Institution Supervision

Directorate

Islamic Non-Bank

Financial Industry

Directorate

Pension Fund and Employment

Social Security Agency

Supervision Directorate

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Implementing integrated regulatory

and supervisory system of NBFI

sector towards all activities in

financial services

Function Duties

Arrange regulations in NBFI

Implement the NBFI crisis management protocol

Enforcing regulations in NBFI

Conducting guidance and supervision on the party

obtaining business license, approval, registration from

OJK and other parties engaged in NBFI

Prepare policy formulation in NBFI

Implementing policies in NBFI in accordance with the

provisions of legislation

Formulate standards, norms, guidance criteria and

procedures in NBFI

Provide technical guidance and evaluation in NBFI

Implement analysis, development, and supervision of

Sharia NBFI

Carry out other duties granted by the Board of

Commissioners.

Indonesia Financial Services Authority (OJK) Chief Executive Functioning as NBFI Supervisor

On-site

Supervision Off-site Supervision

• Financial report analysis

• Risk analysis

Law Enforcement Sustainable Interaction

Monitoring of supervisory

result Executive meeting

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Indonesia Financial Services Authority (OJK) NBFI Supervisory Activity by OJK

13

139

236 255

40

238

151 138

234 252

48

237

145

-

50

100

150

200

250

300

Dec-17 Jun-18

Conventional NBFI Sharia NBFI

13

1 7

4 0

29

13

1 7 5

0

44

05

101520253035404550

Dec 2017 Jun-18

Non-Bank Financial Institutions NBFI Total Entity

Dec-2017* June-2018*

40,52 41,85

1,30 2,98

34,48 29,51

22,74 23,85

- -

0,10 0,16

99,13 98,34

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No. Industry Dec-2017* June-2018*

1. Insurance 1.132,60 1150,10

2. Pension Fund 260,96 260,71

3. Financial Institutions 522,51 548,33

4. Other Financial Institutions 184,91 195,28

5. NBFI Supporting Service 8,26 8,05

6. Microfinance Institutions 0,31 0,34

Total Assets 2.109,56 2.162,82

▫ Conventional NBFI Sharia NBFI

*) Express in trillion IDR

Non-Bank Financial Institutions NBFI Total Asset

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40/ 2014 (Insurance)

Act

3/ 2013 (NBFI Monthly Report)

4/ 2013 (FPT)

5/ 2013 (National Social & Security Supervisory)

10/ 2014 (Risk Rating)

11/ 2014 (Direct Examination)

17/ 2014 (Integrated Risk Management)

18/ 2014 (Integrated GCG)

1/ 2015 (NBFI Risk Management)

2/ 2015 (Data Management and Premium Rate)

14/ 2015 (Own Retention)

23/ 2015 (Insurance Product)

28/ 2015 (Liquidation)

38/ 2015 (NBFI Supporting Profession)

41/ 2015 (Insurance Statutory)

1/2016 (NBFI Investment, last amandement 56/2017)

35/ 2016 (Written Orders)

12/2017 (Anti Money Laundering and Prevention of Terorism

Financing)

67/ 2016 (Licensing)

68/ 2016 (Licensing of Supporting Business)

69/ 2016 (Activity Business)

70/ 2016 (Activity Business of Supporting Business)

71/ 2016 (Financial Soundness)

72/ 2016 (Financial Soundness-sharia)

73/ 2016 (GCG)

17/ 2017 (Administrative Sanctions)

55/ 2017 (Periodic Report)

1/ 2018 (Financial Soundness-Mutual company)

OJK Regulations

73/ 1992 (Insurance Activity Business)

14/ 2018 (Foreign Ownership)

Government Regulations

NBFI – Insurance Industry Legal Framework

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Act 40/2014

(INSURANCE)

INSURANCE

Insurance Company

Sharia Reinsurance Company

Reinsurance Company

Sharia Insurance Company

Insurance Brokerage

Reinsurance Brokerage

Loss Adjuster Company

SERVICE

PROVIDER Actuary

Appraisal Other professions determined by OJK

Public Accountant

NBFI – Insurance Industry Insurance Act 40/2014 (1/2)

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Business Licensing and Institutions of Insurance, Sharia Insurance, Reinsurance, and Sharia Reinsurance

Company

Business Licensing and Institution of Insurance Brokerage, Reinsurance Broker, and Insurance Loss Adjuster

Company

Financial Soundness of Insurance and Reinsurance Company

Financial Soundness of Sharia Insurance and Sharia Reinsurance Company

Business of Insurance, Sharia Insurance, Reinsurance, and Sharia Reinsurance Company

Business of Insurance Brokerage, Reinsurance Brokerage, and Insurance Loss Adjuster Company

Requirements and Procedures of Service Provider for Insurance Companies

Procedures for Determining Statutory Administrator of Financial Service Institutions

Winding up, Liquidation and Bankruptcy of Insurance, Sharia Insurance, Reinsurance and Sharia Reinsurance

Company

Principles of Knowing Customers

Fit and Proper Assessment

Good Corporate Governance of Insurance Company

Examination

Mediation Institution

Procedures and Requirement for Imposing Administrative Sanctions and Blocking the Wealth of Insurance,

Sharia Insurance, Reinsurance and Sharia Reinsurance Company

Implementation of Mandatory Insurance Program

Insurance Business in the Form of Cooperatives and Mutual

NBFI – Insurance Industry Insurance Act 40/2014 (2/2)

Further provisions

in the form of OJK

Regulation

THANK YOU

OTORITAS JASA KEUANGAN

Wisma Mulia 2

Jl. Gatot Subroto No. 42

Jakarta, Indonesia